Financial News

[LittleHurt05]

Im not an accountant but I thought the main benefit of S-Corp was that it was a pass through entity. I tried to look this up but Im not really sure its impact unless you were talking about it lowers the highest tax bracket on S-Corp income.

 

Yes, it's to avoid being "double taxed", you don't pay the corporate income tax on top of individual taxes, you only pay an individual tax. I'll have to double check the exact details on this bill, there are so many different versions being pushed around. Obviously, plenty of wealthy people exploit this with entities that would be hardly considered real corporations.

 

That may be different between the house and Senate versions, not sure.

 

Legitimate tax reform is something that needs to be done, and maybe under a real attempt s-corp taxes would still come down but other loopholes, deductions etc would be eliminated.

 

If anybody truly cared about tax reform, they would just blow up the entire tax code booklet and make it about 10 pages long. There is no reason for it to be so complicated and it only benefits people who have the knowledge or resources to take advantage of it.

[RockRaines]

If anybody truly cared about tax reform, they would just blow up the entire tax code booklet and make it about 10 pages long.

Thats the thing. This isnt reform, its a cut. And its a cut that is being bought and paid for by the largest of donors. They have no interest in removing loopholes they've been exploiting and they have no desire to actually help anyone but themselves. These guys are going to harm medicare, medicaid and social security in the next year. Thats truly showing your colors.

Edited December 1, 2017 by RockRaines

[StrangeSox]

Yes, it's to avoid being "double taxed", you don't pay the corporate income tax on top of individual taxes, you only pay an individual tax. I'll have to double check the exact details on this bill, there are so many different versions being pushed around. Obviously, plenty of wealthy people exploit this with entities that would be hardly considered real corporations.

 

There's that, and there are also gigantic corporations that you'd guess would be C-corps but are actually S-corps. Bechtel is a huge, privately held engineering firm with billions in revenue every year, but it's an S-corp.

 

If anybody truly cared about tax reform, they would just blow up the entire tax code booklet and make it about 10 pages long. There is no reason for it to be so complicated and it only benefits people who have the knowledge or resources to take advantage of it.

 

Yeah, every provision of the tax code has a special interest that's lobbied for it, and that's part of what makes tax reform hard politically. Businesses getting different rates from individuals, deductions for energy improvements, child tax credits, health deductions, 401k deductions, mortgage etc. etc. etc. and oops you've got a big, complicated tax code again!

 

Something that always frustrates me is how often people 1) confuse how tax brackets work and 2) how they get portrayed in talking points as what makes taxes complicated

 

1) Lots of people, even well-off, educated people, don't understand the "marginal" part of marginal tax brackets. You see people who honestly think that if they make say $1000 more and bump into the next tax bracket, that they're going to be paying so much more in taxes overall that it'd actually be a pay decrease.

 

2) Once you know your taxable income, figuring out what you know is a two-step basic arithmetic calculation. It's figuring out what your taxable income is that's difficult.

[pettie4sox]

They absolutely cannot pass this bill.

[StrangeSox]

They absolutely cannot pass this bill.

 

[Arrested Development narrator voice]: They will

[StrangeSox]

McCain and Johnson are both a yes (Johnson was bought off with an increase in the tax cut for pass-through businesses, which just so happens to directly benefit his wealthy family), so that only really leaves Flake and Corker which doesn't matter because they can afford to lose two.

 

The still-to-be-finalized bill will pass the Senate today, and my guess is the House passes it on Monday to avoid having to go to conference.

 

 

I wonder how much Trump's voters will hold him accountable for breaking essentially every one of his campaign promises on what his tax plan would do.

Edited December 1, 2017 by StrangeSox

[Balta1701]

If anybody truly cared about tax reform, they would just blow up the entire tax code booklet and make it about 10 pages long. There is no reason for it to be so complicated and it only benefits people who have the knowledge or resources to take advantage of it.

I understand that the sentiment is aimed at "all the loopholes people have thrown in", but I think this kind of statement is somewhat backwards and counterproductive.

 

Yes there are too many loopholes, but seriously, we're talking about something that manages a $20 trillion economy. This should not be short or simple. You can, if done intelligently, make it "straightforwards and workable", but 10 pages - that's actually harmful.

 

Do we want to use the tax code to encourage anything at all? To give people some benefit to say, have retirement savings? I think there's plenty of logic in that. Do you think you could define a 401K plan in 10 pages in a legal sense? I certainly don't. One of their gambits this time is switching to a different definition of inflation so that as time goes on everyone will start slowly seeing taxes be a larger share of their income. Do you think you can define inflation in the entire economy in 10 pages?

 

You can make a case for "reform". This has a little sprinkling of that in it, but the parts it reforms are entirely "make sure it hurts Democratic states and voters as much as possible" and the rest is a corporate tax cut and estate tax cut paid for by a broad based tax hike starting in about 7-8 years.

[illinilaw08]

I didn't realize only the wealthy were taxed.

 

With respect to the Estate Tax, the first $5.49M per individual is not subject to tax. So for estate tax purposes, it is only the wealthy who are taxed.

 

Caveat to that is that inherited (non-Roth) IRAs are subject to tax since they were not taxed in the first place regardless of the dollar amount.

[ptatc]

Yes, it's to avoid being "double taxed", you don't pay the corporate income tax on top of individual taxes, you only pay an individual tax. I'll have to double check the exact details on this bill, there are so many different versions being pushed around. Obviously, plenty of wealthy people exploit this with entities that would be hardly considered real corporations.

 

 

 

If anybody truly cared about tax reform, they would just blow up the entire tax code booklet and make it about 10 pages long. There is no reason for it to be so complicated and it only benefits people who have the knowledge or resources to take advantage of it.

The EU uses a large value added tax to purchases. This makes sense to me. Tax people on how much yhey use. They wouldn't need the massive tax code.

[ptatc]

With respect to the Estate Tax, the first $5.49M per individual is not subject to tax. So for estate tax purposes, it is only the wealthy who are taxed.

 

Caveat to that is that inherited (non-Roth) IRAs are subject to tax since they were not taxed in the first place regardless of the dollar amount.

Income that wasn't previously taxed, should be taxed.

[Dick Allen]

The EU uses a large value added tax to purchases. This makes sense to me. Tax people on how much yhey use. They wouldn't need the massive tax code.

My brother lives in Switzerland, and that is pretty much how it works there. Very little income tax, but everything you buy is ridiculously expensive.

[RockRaines]

My brother lives in Switzerland, and that is pretty much how it works there. Very little income tax, but everything you buy is ridiculously expensive.

I think we are a bit too big and too diverse for something like that. We already do that at a local level

[StrangeSox]

Canada has a VAT too, IIRC. You've still got to have a bit of a complicated code because the richer you are, the less money you need to spend on essentials. If you just had a flat VAT with no other assistance, stipends, etc., you'd have a massively regressive tax code. Someone making $30k a year spends nearly 100% of their income on things subject to a VAT, someone making $30M spends a tiny fraction.

[southsider2k5]

Did the tax package just die? The Dow went from green to down 225 in like 5 minutes.

Hooray for volatility!

[StrangeSox]

Did the tax package just die? The Dow went from green to down 225 in like 5 minutes.

Hooray for volatility!

 

Michael Flynn pled guilty and will testify against Trump, his family, and his campaign including that Trump ordered him to make contact with Russians. Could be related to that.

[RockRaines]

Did the tax package just die? The Dow went from green to down 225 in like 5 minutes.

Hooray for volatility!

Buy Buy Buy!!!

 

I believe the deficit as well as the tax increase trigger are bigger issues that are coming to light

[southsider2k5]

Michael Flynn pled guilty and will testify against Trump, his family, and his campaign including that Trump ordered him to make contact with Russians. Could be related to that.

 

Just saw that, wow.

[ptatc]

Canada has a VAT too, IIRC. You've still got to have a bit of a complicated code because the richer you are, the less money you need to spend on essentials. If you just had a flat VAT with no other assistance, stipends, etc., you'd have a massively regressive tax code. Someone making $30k a year spends nearly 100% of their income on things subject to a VAT, someone making $30M spends a tiny fraction.

I would agree that it can't be the only tax. It isn't in the EU either. But if it was a major portion of it, I think it would be helpful. The wealthy will still pay more as they spend more. I don't think it should be based on what % of their income they spend. They will still provide the vast majority of the government tax revenue.

[StrangeSox]

I would agree that it can't be the only tax. It isn't in the EU either. But if it was a major portion of it, I think it would be helpful. The wealthy will still pay more as they spend more. I don't think it should be based on what % of their income they spend. They will still provide the vast majority of the government tax revenue.

 

But we already kinda see that with state and local sales taxes, it ends up regressive with the lower end of the income scale paying a lot more of their income on a percentage basis than those higher up the scale.

 

The wealthy spend more in total dollar figures but much less as a percentage of their income. It would be a massive windfall for them to switch to more of a "flat" tax system like that without having a whole lot of other taxes like EU countries do.

[Dick Allen]

But we already kinda see that with state and local sales taxes, it ends up regressive with the lower end of the income scale paying a lot more of their income on a percentage basis than those higher up the scale.

 

The wealthy spend more in total dollar figures but much less as a percentage of their income. It would be a massive windfall for them to switch to more of a "flat" tax system like that without having a whole lot of other taxes like EU countries do.

Yes. If you make a lot of money, it's really, really good for you. If not, not so good.

[StrangeSox]

Flake is a YES, 100% this is passing today.

[RockRaines]

Flake is a YES, 100% this is passing today.

for sure, they are passing this "win" before the hammer drops on Trump

[southsider2k5]

for sure, they are passing this "win" before the hammer drops on Trump

 

I am 100% convinced that what the rush to get all of this stuff done is. Then if something bad happens, they can just blame it all on him.

[StrangeSox]

We'll still have to see if the House has enough votes to just pass the Senate bill as-is (whatever that final form is) or if it'll go to conference and then has to re-pass both chambers. My guess is the House passes as-is in a close vote on Monday. Merry Christmas, millions of Americans who'll lose health insurance.

[bmags]

Zero chance it goes to conference.